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> In cyberspace… market after market is being transformed by technological progress from a “natural monopoly” to one in which competition is the rule. Of all t

> In cyberspace… market after market is being transformed by technological progress from a “natural monopoly” to one in which competition is the rule. Of all the bad predictions in this essay, this is most dead-wrong, deader than a doornail wrong. The internet favors natural monopolies, despite its decentralized design. Or to be more accurate, people using the internet favor natural monopolies. He's a little goofy, but I think Slavoj Zizek is right when he says information technology is communistic. Because it benefits from unified standards and data centralization and suffers from heterogeneity and data silos, it seems to be that information technology will progress from competitive markets, to monopolies, to utilities, to state control in some cases. I'm sure there's some information theory which can express this better than I am, but it's weird that market forces, which are traditionally explained as the least bad way to handle low-info, distributed decision making, don't perform as well when it comes to the distribution and regulation of information itself.

zozbot234 4y ago
> information technology will progress from competitive markets, to monopolies, to utilities, to state control in some cases. The whole point of the Internet was to be a decentralized network with no single point of failure. Something that might look like a unified platform to users, but be implemented behind the scenes via self-interested coöperation among a huge number of involved actors. This is how markets work, and what communist central planning has never been able to replicate.
Retric 4y ago
The internet favors specific kinds of monopolies that are different from the physical world. Small towns only need one laundromat, car wash, gas station etc until they reach sufficient size. The logistics of traveling in the real world ends up creating lots of monopolies from tiny coffee shops to massive cable companies. The online equivalent is up middlemen of various stripes where people just aren’t willing to comparison shop vs just buying from Amazon. Content creators on the other hand end up with a really long tail. They obviously benefit from a vastly wider reach and the ability to thrive with tiny niche followings. But the then need to compete with everyone else in the world.
- zozbot234 4y ago
  These are not quite "true" monopolies however because the market for laundromats or car washes is still open to entry, i.e. contestable by others. The apparent monopoly is in fact checked by the "virtual" competition that might be expected to appear if it becomes too inefficient. True monopolies are generally a product of real barriers to entry, which are indeed possible on the Internet. Reasonable users will be aware of this though, and prefer more open platforms where even prospective competitors are free to interoperate with the incumbent, and there's no undue lock-in. The remaining obstacles amount to things like IP regulation, that can prevent entry even by a more open competitor.
  - Retric 4y ago
    The barriers to entry into a market with an existing laundromat, ignoring the setup costs, is the insufficient number of customers to support both until one of you fails. That’s what makes it a natural monopoly, you can’t have two business in stable compensation one of them will fail. Anyway, any market created monopoly will weaken once it loses it’s competitive edge. The run down movie theater may get driven out by a new cinema just as De Beers fell to from 80+% to sub 30% market share, but the barriers to entry are real.
    - zozbot234 4y ago
      > That’s what makes it a natural monopoly, you can’t have two business in stable compensation one of them will fail. Yes it's a monopoly in that there's only one firm, but it won't behave much like one. Because the firm will be incented towards being a strong competitor towards any new entrants in the market, lest it be supplanted by them - even before those new entrants exist.
      - deleted 4y ago
        [deleted]
      - Retric 4y ago
        Sure it’s always a question of the barriers to entry. However, the most effective barrier here is having a large bankroll to operate at a loss and drive competition out of the market. Which means charging monopoly prices just like every other monopoly.
deleted 4y ago
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int_19h 4y ago
Capitalism in general favors monopolies for the simple reason that more capital makes more profits, all else being equal, and more profits give ability to acquire more capital. That's why any society that wants a capitalist economy to remain competitive needs some kind of anti-trust enforcement. Internet just happened to be the fertile ground (for all kinds of business) on which the present flock of monopolies grew after anti-trust has been severely curtailed under Reagan.

zozbot234 4y ago

> information technology will progress from competitive markets, to monopolies, to utilities, to state control in some cases. The whole point of the Internet was to be a decentralized network with no single point of failure. Something that might look like a unified platform to users, but be implemented behind the scenes via self-interested coöperation among a huge number of involved actors. This is how markets work, and what communist central planning has never been able to replicate.

Retric 4y ago

The internet favors specific kinds of monopolies that are different from the physical world. Small towns only need one laundromat, car wash, gas station etc until they reach sufficient size. The logistics of traveling in the real world ends up creating lots of monopolies from tiny coffee shops to massive cable companies. The online equivalent is up middlemen of various stripes where people just aren’t willing to comparison shop vs just buying from Amazon. Content creators on the other hand end up with a really long tail. They obviously benefit from a vastly wider reach and the ability to thrive with tiny niche followings. But the then need to compete with everyone else in the world.

zozbot234 4y ago
These are not quite "true" monopolies however because the market for laundromats or car washes is still open to entry, i.e. contestable by others. The apparent monopoly is in fact checked by the "virtual" competition that might be expected to appear if it becomes too inefficient. True monopolies are generally a product of real barriers to entry, which are indeed possible on the Internet. Reasonable users will be aware of this though, and prefer more open platforms where even prospective competitors are free to interoperate with the incumbent, and there's no undue lock-in. The remaining obstacles amount to things like IP regulation, that can prevent entry even by a more open competitor.
- Retric 4y ago
  The barriers to entry into a market with an existing laundromat, ignoring the setup costs, is the insufficient number of customers to support both until one of you fails. That’s what makes it a natural monopoly, you can’t have two business in stable compensation one of them will fail. Anyway, any market created monopoly will weaken once it loses it’s competitive edge. The run down movie theater may get driven out by a new cinema just as De Beers fell to from 80+% to sub 30% market share, but the barriers to entry are real.
  - zozbot234 4y ago
    > That’s what makes it a natural monopoly, you can’t have two business in stable compensation one of them will fail. Yes it's a monopoly in that there's only one firm, but it won't behave much like one. Because the firm will be incented towards being a strong competitor towards any new entrants in the market, lest it be supplanted by them - even before those new entrants exist.
    - deleted 4y ago
      [deleted]
    - Retric 4y ago
      Sure it’s always a question of the barriers to entry. However, the most effective barrier here is having a large bankroll to operate at a loss and drive competition out of the market. Which means charging monopoly prices just like every other monopoly.

deleted 4y ago

[deleted]

int_19h 4y ago

Capitalism in general favors monopolies for the simple reason that more capital makes more profits, all else being equal, and more profits give ability to acquire more capital. That's why any society that wants a capitalist economy to remain competitive needs some kind of anti-trust enforcement. Internet just happened to be the fertile ground (for all kinds of business) on which the present flock of monopolies grew after anti-trust has been severely curtailed under Reagan.